IMF warns inflation risk could derail global recovery

The IMF’s latest World Economic Outlook warns that renewed Middle East tensions could push inflation higher and disrupt supply chains, with global inflation projected to rise to about 4.7% this year before easing to 3.9% in 2027, while global growth slows to around 3% before rebounding to 3.4% in 2027. The euro area is expected to keep inflation above the ECB’s 2% target until 2028, suggesting more rate hikes could be on the horizon for major central banks, even as AI-driven gains support some economies. The report also highlights risks to energy and food security if disruptions persist, underscoring that inflation remains the primary threat to a smoother global recovery.